Weekend Market Report
What a difference a week makes in the markets! All the indices I track (Dow, Nasdaq, S&P500, Russell 2000) sputtered back to life and closed higher for the week. Gold and Silver moved higher while overall S&P500 volatility dropped. It looks like profits are back on the table!
To celebrate, I updated The Weekend Market Report format for readability, removed thee “below the fold” signup and streamlined a few things. Get your information and forecasts fast! Let’s get started!
In this week’s issue 📨
- A spotlight on my SPY credit spread trade
- Zettelkasten links
- Silver and Gold directional price forecasts
- S&P500 historical price forecast
Was this email forwarded to you? Subscribe here!
Spy Credit Spread Trade Spotlight
There’s a Law of Karate from my old dojo that says, “Strike when the opportunity presents itself” and I did just that this month when the market fell off a cliff and volatility spiked!
On Monday, August 5, 2024, the market dropped in a panic and the VIX shot up to over 63.
When volatility like this spikes, it could remain volatile and move higher or the volatility could drop. I don’t know what the market will do but I know how to capitalize on it.
I decided to hedge my bets and use this volatility spike to enter a SPY credit spread. A credit spread is when you sell a put option at-the-money (ATM) or just out-the-money (OTM) and then buy a put OTM. The credit spread is considered a Bullish trade as I’m expecting SPY to move higher from where I entered the trade.
I sold a 510 (Short) Put and bought a 505 (Long) Put, which netted me $0.94 of gross premium. That’s $94 per contract. My risk is 5 points on the SPY and I hedged my risk by securing the Short Put with cash.
If the market moved against me the 505 Put would protect me and I could exit out of the Short Put, or if I get assigned the cash would cover the cost of buying SPY shares at 510.
SPY moved higher after Monday and I held onto this position for 4 days before closing it out and netting the premium.
Zettelkasten Links
Welcome to a collection of links and notes that I find interesting. Affectionately called a Zettelkasten, a German word for notes in a box.
- In AI, Smaller, Cheaper Models Are Getting Big Attention - via Yahoo
- Quantum Entanglement in Neurons May Actually Explain Consciousness - by Mike Mcrae
- Zuckerberg to explain why drug dealers are advertising on Facebook and Instagram - by Karissa Bell
- Video of Eric Schmidt blaming remote work for Google’s woes mysteriously vanishes - by Devin Coldewey Maxwell Zeff
- First case of more dangerous mpox found outside Africa - via BBC News
- Elon Musk’s financial woes at X have Tesla bulls fearing he will liquidate more stock - by Christiaan Hetzner
Silver Price Forecast 1 Week Ahead
Silver prices closed higher to $28.77 from $27.49 the week before. The price forecast was for lower prices this week, so the model was incorrect. The model forecast has been right 7 out 11 times (63%).
The price forecast for Silver next week is for lower prices.
Gold Prices Forecast 1 Week Ahead
Gold prices closed higher to $2,498.60 from $2,432.10 the week before. The price forecast was for lower prices this week, so the model was incorrect. The model forecast has been right 7 out 11 times (63%).
The price forecast for Gold next week is for flat prices.
S&P500 Historical Volatility Forecast 1 Week Ahead
Volatility on the S&P500 closed lower to 0.128 from 0.319 the week before. The price forecast was for lower prices this week, so the model was correct. The model forecast has been right 8 out 11 times (72%).
The volatility forecast for the S&P500 next week is higher volatility.
Where Are They Now?
Premium members can access a list of my stock, ETF, and mutual fund holdings. You’ll get access to a monthly Buy/Sell/Watch List update and can follow along and see if I’m making money. You’ll have access to my trading strategy and my favorite market trading idioms and mistakes.
The Fine Print
Terms of Service | Disclaimer | Affiliate Disclaimer